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Win the Bidding War! A Realtor’s ‘Can’t Lose’ Secrets to Getting Your Real Estate Offer Accepted

It’s the home-buying situation that every prospective homeowner dreads. You’ve found your dream house. You can picture how you’ll decorate it. All you have to do is make an offer and close the financing. But lo and behold, someone else wants the same house. And worse, they’ve offered more money! The real estate bidding war has begun. Here’s how to win every time.


Putting an offer on a home can be exhilarating, especially if the offer you submit is exactly what the seller has asked for.

When you reach this stage, chances are you’ve already started to fall in love with the home and are picturing yourself living there. After all, you’ve met the seller’s asking price; there’s no reason the property won’t become yours, right?

Wrong.

Unfortunately, another potential buyer may have made an offer similar to—or even higher than—yours. Often times, rather than giving up on your dream home, you may decide to change your offer; making the terms more desirable to the seller and perhaps even raising your price.

This is the start of a bidding war.

Luckily, it isn’t always the highest offer that’s accepted. Using a few ‘tricks of the trade,’ you can make your offer stand out as the most appealing to the seller.

Winning strategies

Kill the Conditions.

First, remove conditions (such as ‘contingent on the results of a home inspection’) from your offer.

Say Hello.

Meet the homeowners. Your offer may be accepted if the owners identify with you, or feel you’d be a good match to the neighborhood. If it’s not possible to meet the owners in person, write a letter introducing yourself and attach it to your offer.

Give the Seller Time.

The date of buyer possession is often an important part of the offer. The seller may need to coordinate selling, buying another home, and moving in a short amount of time. Offer the seller two to three days to move out after closing, without asking for compensation.

Up Your Earnest Money.

Earnest money, the deposit you put down on the home if your offer is accepted, shows the buyer you’re serious. Although it can be tough to shell out thousands of dollars before you even know if the deal will close, if a seller has two competing offers to choose from, she may feel more secure going with the offer that includes a larger deposit.

Get Pre-Approved.

Sellers are often nervous that a buyer won’t be able to get financing, which is why some sellers will accept a cash offer for less than an offer that requires financing. Even if you have squeaky-clean credit, it can be hard to compete with a cash buyer. But you can improve your odds with mortgage pre-approval; it shows sellers that a bank has taken the first step will give you a mortgage.

If you don’t have the paperwork in order you need for pre-approval, at the very least you should have a mortgage pre-qualification letter attached with your offer. Any bank can give you a pre-qual letter in a few minutes; they typically don’t pull your credit; they’ll simply ask for your income, assets, and debts and run a quick calculation of whether you can afford a mortgage.

Be Prepared.

Ask your Realtor to prepare multiple contracts, with different purchase offers. Your Realtor can submit these whenever needed to stay on top of the bidding war. Make your offer capture attention by offering odd numbers, such as $449,999, rather than $450,000.

Dealing with Counter Offers

Even the best offers may be ‘countered’ by the seller. A counter offer means the seller would like to accept your offer, but is requesting specific changes. For example, you may offer to purchase the home for $400,000 with a 20 percent down payment; stating that the seller must pay for the repair of termite damage prior to the close of escrow. The seller may counter offer stating that he will accept the sale for $400,000 and a 20 percent down payment, but will not pay to repair termite damage.

At this point, you may choose to accept the counter offer, to back out and search for another home, or to counter the counter offer. Counter offers are considered new contracts, not a revision of the original offer, so be sure to read the contract carefully.

It can be easy to get swept up in the emotion of a bidding war; not only because you love the house, but also because it feels great to win! Yet, it’s important to remember that it’s just a house and there are other houses available.

Always, always, always know the maximum amount of how much house you can afford (and how much you’re comfortable spending) and stick to it. Don’t make the mistake of paying too much; causing financial difficulties for years to come. Talk to a mortgage broker or Realtor if you’re not sure exactly how much you can afford.

Get Pre-qualified Now

About Sarah Davis

Sarah Davis is a real estate broker in San Diego, Calif. She enjoys helping both buyers and sellers and was voted one of the top 10 best real estate agents in San Diego in 2013 by Union Tribune readers. In her spare time she talks about real estate on a local radio show and manages her website RealtorSD.com.

Comments

  1. Is removing the contingency of the home inspection really a good strategy in buying a house? While it may help you buy the house, wouldn’t it be bad to buy a house that has huge issues that come up during the home inspection that the seller won’t pay for? You would then either loose your ernest money or buy a house that could be a money pit. I’m just not so sure giving up the home inspection contingency is something that should be on the table for negotiation…

  2. No, it’s not always a good strategy, I agree. But it’s a possibility. I wouldn’t remove it if it was your only contingency, yet if you have plenty of other contingencies to back up on and you’ve altered other terms to meet the seller’s preference it’s an option.

  3. I agree with ccl. NEVER EVER remove the contigency for a home inspection. I know someone who bought a home and had to spend about $100K for a whole new plumbing system, kitchen, etc. within a year or two.

    A home inspection can help you identify potential problems and the scope of such problems. It can also help save you a lot of money and stress.

  4. landlord says:

    Here’s an idea: read a book or two about inspecting a house and educate yourself. Houses are not complicated products. They consist of a foundation, frame, plumbing, electrical, and roof. It’s pretty easy to spot problems if you know what to look for. Anybody who had to spend 100k for new plumbing and kitchen either has money to burn or is too lazy to hedge their bets.

    • Landlord, as a landlord myself and a fix and flipper, I completely agree. Taking the time to understand the way houses are built can save a ton of money. I still got the inspection on my most recent purchase and will continue to. I also recommend it for all of my clients’s transactions. But its good to know yourself what is going on with the house. I still wouldn’t drop the inspection contingency unless it was that which made the offer accepted and there were other contingencies like financing though but that’s to play it safe.

  5. Dropping the inspection requirement works IF you have some knowledge of homebuilding and/or repair, as Landlord suggests. It’s also not a bad idea if the home is relatively new.

    Your suggestion to meet the owners is so true. We once won a bidding war because the owners thought our family (with young children) would fit in the neighborhood.

  6. I wouldn’t drop the home inspection contigency either. I started to buy a house and the seller countered my offer with a shorter contingency period, 17 to 10 days. I got a home inspection and found serious plumbing issues with the house. Water in some rooms but not in others, hot water in some and not in others etc. Ultimately I passed on the house. I’m now in a bidding war with a new house and I refused to give up that contingency. I don’t know enough about construction, nor do I wish to climb up in the attic, I will let a professional do that. I will find out shortly whether or not my offer was accepted.